Next gens plough their own philanthropic furrow

As younger generations become involved in the work of their families' philanthropy, the processes they use evolve very differently. As two third-generation members, Mary Galeti and Katherine Lorenz (pictured) explain, there are many ways to select the right charities to carry out your family's philanthropic vision and to develop your own philanthropic voice.

Mary Galeti joined the board of the Tecovas Foundation, a private family foundation established by her grandmother, when she was 18-years-old. She soon found herself part of a small, very young board of directors responsible for making major gifts. "In our case, we were thrust into foundation leadership," says Galeti, the granddaughter of Texas philanthropist Caroline Bush Emeny, whose own grandfather patented barbed wire with a partner and founded the Frying Pan Ranch in Amarillo, Texas. In a short period, Galeti's grandmother, mother and aunt passed away, leaving oversight of a substantial foundation in the hands of Galeti and her young cousins, one aunt and her stepfather. "My cousins and I had to learn about philanthropy on the job," says Galeti.

Galeti's grandmother created the Tecovas Foundation in 1998, naming it after a spring on the Frying Pan Ranch. Initially, her grandmother's intention was to establish the Globe-News Center for the Performing Arts in Amarillo. While that grant was soon fulfilled, the passing of the three family members resulted in additional funds flowing into the foundation, creating a larger pool of money than the young board had anticipated. "It was daunting," says Galeti. "We didn't realise how much money we had to give away nor how much work it would take to really do the job in the right way."

The board took on the task of redefining the mission of the foundation. With Globe-News Center launched, they asked themselves how they could continue the family legacy.

"We started thinking about what my grandmother, mother and aunt would have wanted and what could best serve their memories while still addressing the things that we were interested in ourselves," recalls Galeti, now 26. They sought guidance from their corporate trustee, Glenmede Trust Company, the National Center for Family Philanthropy, the Council on Foundations and the Ohio Grantmakers Forum.

Because the family had split time between Amarillo and Cleveland, Ohio, where Emeny's husband was from, the younger generation decided they could honour their grandmother's dedication to those communities by making multiple gifts to local charities as well as to some international organisations. They have selected dissimilar organisations in each community based on the widely differing needs of the two populations. "We try to be thoughtful about each area," she notes.

Initially, the board collected grants from organisations they knew well, which simplified the due diligence, and made gifts to the Cleveland Opera, the Cleveland Museum and the United Way of Amarillo. One of the biggest challenges for Galeti and her family in selecting grantees is finding time to conduct due diligence.

"Since most of us are 30, we are very busy with school, families, and work, and often traveling," says Galeti, noting that one cousin is in medical school and another is trekking around the world. "Getting everyone in one space is the biggest challenge."

As time goes by, the board members are trying to transition to a more formal process. Currently, they conduct due diligence on each organisation one by one, meeting with executive directors and staff, studying statistics and annual reports, and doing research on the internet.

"We're trying to figure out how to create a more formal process," says Galeti. The family is looking at various models, she says, bringing in outsiders and exploring different options. No one person has overall responsibility for grant selection, but the final word often falls to Galeti, who observes: "It's great for me because I can fund my interests. But that is not the ideal way to operate the foundation and it creates some family dynamic issues."

Katherine Lorenz also started learning about philanthropy early, but she was integrated into a structured process under the guidance and example of the previous generation. Her grandparents established the Cynthia and George Mitchell Foundation in the 1970s and the family had long been engaged in Texas philanthropy.

Lorenz's grandfather, George Mitchell, had focused on energy early on in his career as a petroleum geologist and engineer in Texas, eventually building Mitchell Energy & Development Corp into an industry leader. The Mitchells had supported research on sustainable energy technologies and food sources, but most of the foundation's grant making had been large endowment type gifts to universities and health institutions.

"About five years ago, my aunt realised we needed to start taking the foundation in a different direction," recalls Lorenz, 30. The family realised there was a need to set up a structure so that when her grandparents are no longer involved, they would have a process in place for carrying on the work of the foundation. They embarked on a strategic planning process and everyone over the age of 25 at that time was included.

The group included Lorenz's grandfather, his 10 children and eight of his grandchildren. Under her aunt's leadership, the entire family took time to think about their ongoing mission. They brought in outside consultants and tried to decide how they could make the most impact.

"Out of those conversations came an easy consensus to focus on two major initiatives over time: the first being renewable energy and the second, water," says Lorenz. "Following that broad decision, we embarked on a one year learning journey about renewable energy."

In February 2008, the foundation announced a $6 million, 3-year initiative to advance renewable energy technologies in Texas. In partnership with the San Francisco-based Energy Foundation, the grant supports technical and economic analysis, model policy development and policy maker education to facilitate the development of clean energy markets.

The family came to an easy consensus on the grant. Lorenz attributes that common vision to her grandfather's strong, historical interest in environmental sustainability. She notes that the family was driven by a desire to make the work of the foundation their grandfather's legacy.

"We're following his vision," she says, "We've grown up hearing him talk about the environment and that theme seems to be reflected in our own giving interests."

The process was very democratic. There were 12 voting members on the board and everyone participated. Lorenz comments that a group this size makes the process easier. If they are split on a decision, she says, they know they need to dig deeper into the issue.

"It was not difficult to come to a conclusion on the large gift," says Lorenz. "After all the study we'd done, we all agreed that we wanted to make a big impact and we felt working with the Energy Foundation would allow us to work on both advocacy and policy."

The family is about to embark on a similar process looking at their second initiative, water. They will bring in outside experts to study the issues and then drill down into specific areas where work needs to be funded.

In addition to the large group gift, Lorenz says that each of the siblings receives $20,000 of discretionary funds each year to give as they choose, while each grandchild receives $10,000 per year.

"We have discretionary funding because each person has passions outside renewable energy and environmental sustainability," says Lorenz. The family respects that each individual needs to develop their own philanthropic voice and experience. Influenced by time she spent working in rural Mexico, for example, Lorenz created a NGO in Mexico which focuses on agriculture and nutrition. She has found that her individual charitable work informs her work with the family foundation.

Lorenz and Galeti agree on several best practices that younger generations can follow to define their philanthropy and select good organisations to fund.

Both assert that it is critical to decide up front what you want achieve with your giving. Galeti says, "Do you want to focus on what you know or do you want to be an entrepreneur?" She points out that if you want to launch an organisation or initiative, you have to roll your sleeves up, do your homework, and really get involved. If you go with well-known, long standing organisations, you are more likely to be comfortable that a gift to them will be well tended.

"You need to be really clear about your own value set," she says." Be deliberate about your grant making in the context of that priority."

Both Lorenz and Galeti also maintain that working with other families and outsiders can provide perspective and objectivity. They both recommend Resource Generation and The Philanthropy Workshop as two groups which teach skills about how to be a better philanthropist.

Working with experts in their field of interest helped Lorenz and her family to come to an easy agreement. "Have outsiders come in – experts are helpful and can have an outside perspective," says Lorenz. "When a third party is involved, it takes some of the family dynamics out of the decision-making."

Because Galeti was thrust into grant-making without much preparation, she encourages younger generations to talk with their parents or grandparents about how they can become involved. "Ideally, one would sit down with their parents and grandparents and have a candid talk," she says. "You can invite them to find a role for you. It's an important step."